In an op/ed appearing in several Minnesota newspapers, State Representatives Deb Kiel and Dan Fabian call out Minnesota Department of Revenue Commissioner Myron Frans for saying something to the effect that a Thief River Falls entrepreneur did not build his business alone.

It’s evident from the commissioner’s response to the business owner that there are two vastly different ideas as to how we should help our economy grow and add jobs to our area.

We maintain that local businesses — the backbone of our economy — will help rebuild our economy with a more favorable tax code that makes it easier for business owners to operate and expand, decreased regulations and a government that gets out of the way.

The representatives work themselves into a lather over the commissioner's comment so they can segue to a popular and evergreen theme: Minnesota is an unwelcoming place for small business, with taxes and regulation that stifle entrepreneurs and drive companies into the low-tax arms of South Dakota.

But where's the proof? One business owner grumpy about his taxes does not make a case. And while the gentleman's company wouldn't exist without his original vision, hard work and risk-taking to get it off the ground, he could not have built it alone.

No one really builds a business without the help of other people or the support of the community in which it operates.

No matter how hard you work, no matter how smart you are, no matter what the income tax rate is, your business's potential is extremely limited without the talents, ideas, contacts and labor of other people. And while the importance of location varies with the type of business, no owner can function without the public infrastructure, laws and court systems that support the company.

As the founder of a business that has lasted for 24 years, some of them without me since I turned it over to employees, I learned how hard it is to find, recruit and retain good employees, suppliers and customers—and how important place is, in educating workers, giving them relevant experience and providing an environment where they want to live, raise families and enjoy a well-rounded quality of life.

Without employees, you're unlikely to ever have to worry about paying the top tax rate.

However, it's also true that a majority of small businesses are one-person enterprises, so in that sense, there are a lot of business people whose businesses are the product of their work alone.

Starting a business is tough, but it's even harder to build one. Look at these facts:

The average American small business employed roughly 2.5 to 5 people, depending on the industry PDF.

90% of companies with workers on the payroll employed fewer than 20 people in 2007, when the economy was in better shape.

Only about 3% of small business owners in the U.S. will earn enough to be subject to top-tier federal tax rates; 57% of small businesses have revenues of less than $25,000 a year.

About half of small businesses either fail or close within five years; by 10 years only about 35% are still around.

Most of these businesses fail to grow because of inexperience, insufficient capital, poor management practices and competition, not regulation and taxes. And here's one more reason why businesses don't grow:

Most small employers are restaurateurs, skilled professionals or craftsmen (doctors, plumbers), professional and general service providers (clergy, travel agents, beauticians), and independent retailers. These aren’t sectors of the economy where product costs drop a lot as the firm grows, so most of these companies are going to remain small. And according to Hurst and Pugsley’s survey evidence, the majority of small business owners say that’s precisely their intent—they didn’t start a business for the money but for the flexibility and freedom. Most have no plans to grow.

In other words, the greatest limitation on the growth of small businesses is the individuals themselves.

I can honestly say that government never got in the way of my business, nor did it directly intervene to make us successful. It simply contributed to the conditions that allowed us to succeed, and when we did, it collected more taxes.

But issues vary by industry. If there's concrete evidence of real problems, Kiel and Fabian should cite them and propose solutions. Instead, they allege a Dayton administration hostility toward business in general, while claiming credit for Minnesota job gains, lower than average unemployment and higher tax revenues that occurred under the governor's watch.

"Getting government out of the way" is a political slogan without an actual track record. Constant carping about Minnesota's tax rankings and business climate hasn't helped a single business, and it's probably scared away a few.

The original story concerned social services providers who elected to continue services to their clients, despite not being paid during the shutdown. A psychologist provided some context about possible motivations the providers might have, but I thought there was a lot more worth discussing.

Craig responded to the original post in a form that invites breaking the discussion into individual themes. I'll set up separate posts, so we (and readers) can extend the discussion in the comments section without creating one overwhelming read.

Here's his first point:

Indeed, Charlie, there are lessons to be learned from All About Kids.

The first is a lesson about virtue. Roxanne Williams is a virtuous person, but not as you imply because she does what she does for low-income people. She is virtuous because she takes her work personally, and she takes personal responsibility for the results. That low-income parents benefit from her work is also a benefit to the community, but Williams deserve praise for her dedication to the work, not for whom it was done. The same praise is due a contractor who performs unpaid time and provides unpaid materials on a job he underbid on a $1M home. Virtue is about the work, not for whom it is done.

And my response:

Craig, I agree with you somewhat on your point about virtue, although I would use the word integrity because it has less of a moralistic overtone. The integrity displayed by Roxanne and your contractor exists in many work settings, whether the payer is a wealthy client, a low-income parent, a global corporation or the state government.

Let me also observe that your lesson declares a tie and allows everyone to dust off their hands without doing anything. I'm not interested in handing out brownie points for abstract virtue.

I believe the kind of work also matters in this discussion. To separate the work from the client strikes me as overly convenient to your argument; we can all think of cases in which the worker was "virtuous" but the client's purpose or the work's outcome was horrific.

Compassion and caring for others is a very important attribute of this story. Note that it is about about the delivery of social services — not IT services or construction. (State highway contractors suspended their work during the shutdown, and it now appears they may not get paid for the costs they incurred, thanks to language inserted in the budget bill. That example raises a whole other set of issues.)

We hear from small government advocates that the private sector could better fulfill roles presently taken by government — but except for some generalities about "the market," not how this will take place or how effective it will actually be.

Integrity of the sort on display here is a valuable social asset. My interest is in how our governmental, social and economic systems either encourage or repress the beneficial practice of integrity.

So here's a question: What happens to Roxanne and her clients if the government gets out of her business?

Craig answered:

Charlie, to qualify the kind of work is the crux of the difference between your philosophy and mine. You would insert a third party, in this case yourself (“I believe”), as arbitrator of some hierarchy of values to be imposed upon others, legally through taxation or morally through peer sanction. I do not believe any third party has that authority – legal or moral.

I agree, compassion and caring is a part of this story, but compassion implies the concept of “compassion to whom for what.” Roxanne Williams extended services to her clients at personal expense – people in whom she had a vested personal interest. They were individuals to her with faces and names and personal relationships. Her personal integrity was at issue; she could have walked away as others did, but to walk away would have been to sacrifice her integrity – a greater sacrifice to her than whatever material loss she might suffer.

I submit that Williams did not sacrifice anything to serve her clients at her own expense during the government shutdown (she chose a higher value over a lesser value) and for that she is to be praised. By your definition -- the “kind of work” matters -- Williams’ primary merit is that her effort was done selflessly for others, not what she accomplished. The latter attitude is fundamental to progressivism – taking the property of the wealthy is ok if doing so provides for others, for example.

The reason you hear only generalities about “the market” and not how the private sector could (would) better fulfill roles presently taken by government is because free-market advocates are not arrogant enough to assume they have all the answers; they know, however, that there are people who do have the answers, and removing the expectation (and moral hazarad) that government will solve all social ills would motivate a diversity of alternatives for, in this case, daycare for low-income families.

Government cannot solve the normal problems of a complex community, but the expectation that government can creates a moral hazard that represses the beneficial practice of integrity. There is no virtue, no integrity, when A & B get together and take from C to benefit D because they feel D is in need and C can afford it, and it is D’s need alone that makes him deserving. That Williams was not newsworthy (or unable to display integrity by your definition) until government shutdown would seem to support my point. It was not the presence of government that displayed Williams’ integrity; it was the absence of government.

Charlie, I cannot nor would I presume to definitively answer your question “What happens to Roxanne and her clients if the government gets out of her business?” any more than I would definitively tell you what product will replace the iPad or what company will be the next Apple. I do know the iPad replacement will be really cool; I also know that without the general expectation and moral hazard of government mucking around in social problems, spontaneous solutions, more efficient and effective (albeit not perfect) solutions, will arise. I speculate about such in my original response, which I leave to discuss in a later thread.

And my reply:

"I do not believe any third party has that authority — legal or moral."

This, of course, is why we should not give 16-year-olds the right to vote, and why we will not make much more headway on this question.

Finally, you twisted my meaning about Roxanne Williams and the “kind of work.” What she accomplished matters very much; what she did and who she did it for had more social value than, say, polishing doorknobs in one of David Koch’s vacation retreats.

During the Minnesota state government shutdown, a story appeared about the operator of All About Kids day care center in St. Paul, which lost its state reimbursements that allow low-income clients to pay on a sliding scale.

"I know other centers are turning parents away. But I couldn't, and I didn't charge them anything. I would not do that to my parents. They would have been in a worse position," she said.

Roxanne Williams could be described variously as a social services worker, a state contractor or an entrepreneur.

Personally, I'll go with highly evolved soul.

The story told how a number of "child and senior day care providers, job counselors, interpreters and other furloughed contractors kept working with Minnesota's sick, poor and jobless -- without pay."

As a regular volunteer working in child care, I was not surprised by their compassion. But I wondered how people like Williams would be regarded through the prism of libertarian economics.

Government cannot do anything for anybody until it first takes the resources from the private sector that produces the wealth that makes compassion possible.

My first inclination was to draw some snide lessons from this. For example, will smaller government really inspire the private market to provide low-cost childcare so low income parents can search for work and hold jobs?

But then I wondered if Craig would show up here and discuss it with me.

If we we're going to fix our state budget, we can't just rely on theoretical abstractions and rigid political positions, so I'm going to see if he's interested in digging into some of the lessons from All About Kids.

Sen. Parry, whose website says he "owns and manages a marketing and motivation company and his family owns the Godfather's Pizza franchise in Waseca" tells MPR he needs to collect the maximum per diem payment for legislators:

"This is for the session, my job. I have no other job at this point in time," said Sen. Mike Parry, R-Waseca.

Parry's positions make it hard for me to support him on this. After all, he was elected on promises to cut state government by 15% across the board and to give job creation over to the private sector. He positions himself as a successful business person, and then pleads poverty. A man with his resume should be able to create a job for himself without relying on the public dime.

But I'm also tired of the partisan games that have been played over the per diem issue.

When DFLers took it — even though they were in the majority and running active committees — they took the heat from the GOP and their attack chihuahuas. Now that MNGOP members are taking the max, it's the DFL's turn to point out the hypocrisy.

Michael Brodkorb, who used to specialize in this crap until his state-paid job forced him to adopt a bit of decorum, tweetwhines that MPR hasn't given the MNGOP Senators credit for saving half of the $100,000 they promised to trim for per diems (and Parry RTs him):

Maybe, Michael, it's because the House spent $77,000 more on daily expenses versus comparable session two years ago, so your caucus is a net drag on the budget.

To be fair, the overall dollars are tiny, and the MNGOP has more people in the House and in the Senate, a slim majority of their members taking the max per diem are from outstate, compared to most of the DFL being from the Twin Cities metro.

That should show that this isn't a matter of parties.

Parry's point, if I may pose it better than he did, might be that outstate legislators and those who don't have flexible jobs or big incomes should be able to serve in the legislature without taking a big hit to family finances.

And legislators — like other state workers — ought to get paid fairly for their work, without a lot of sniping about whether it's deserved when costs go up.

Increasing pay is not a bad idea, but it's tough for legislators to vote to increase their own pay. That reason, plus the disparities in cost of living between a St. Paul legislator and one from Waseca, justify the per diem as a current workaround.

If Parry is willing to say all state workers — including legislators — should be paid fairly for the work they do, I'm on his side. If he says the citizen legislature ought to include regular folks as well as business owners, insurance agents and financial planners, I'm with him.

But if he thinks state budgets can be cut arbitrarily, while the legislature should be paid more because it's a special case, he's lost me. And if he insists families don't try to balance their budgets by seeking more income, then he has no credibility on any tax question from now on.

Conrad deFibre's story about the troubles Westbrook, MN, faces in maintaining its streets illustrates a point I've made before.

Motor vehicle users don't pay for the full cost of the streets they use most.

[Cities throughout Minnesota] maintain nearly 45,000
lane-miles of
streets, on which vehicles travel 8.9 billion miles a year. But little
of the money needed for the job comes from motorists' user fees such as
fuel and registration taxes. Instead, regressive property taxes and
special assessments pay the lion's share.

The car culture often points to light rail lines and bike lanes as not being self-funding, but:

The latest numbers indicate that user fees will pay
barely two-fifths of the $4.7 billion in projected construction needs
until 2030 for the busiest streets in Minnesota's biggest 144 cities.
And that's only if apportionments don't continue to decline.

Cutting state aid for roads is just another facet of the present trend of balancing state budgets by shifting more costs to cities. Maintenance and construction get deferred when cities face shortfalls, pushing those costs into the future — when repairs will be even more costly.

And while small government advocates like to claim city operations are full of waste, looking at the budget through the windshield can be instructive. Our cars cost us a lot. And street repairs, like education costs, may be another can we kick down the road in our denial.

In my suburb of Golden Valley, street maintenance is the fourth largest operating cost category, just slightly behind administrative services and fire and inspections. (Police is by far the largest category, at $4.56 million versus $1.37 million.)

But street maintenance is only one auto-related operating cost. Police devote a lot of resources to traffic and accidents; engineering (general engineering plus traffic signals, street lights, concrete repair) and public works (responsible for the city's infrastructure).

Then there are the capital costs. In Golden Valley, the city's pavement management program to improve city streets is budgeted to be much larger than the police budget through 2014.

Like it or not folks, our car dependence has a lot to do with our tax bill, whether we pay it now or pass it on to our kids.

I, for one, think that government -- especially the federal government
-- is too big, too powerful, too intrusive and too expensive. I believe
the best way to reverse this trend is for states and individuals to push
back against the encroachment of the federal government into the
minutia of our daily lives.

After sending a response to Tom Emmer's op/ed on giving Minnesota veto power over federal laws, I realized if my letter emerges at all from the maw of the Strib, it will be next Sunday, given the print mentality of the OpEx section. So here it is now:

At Tom Emmer’s invitation, I took a close look at “encroachment of the federal government into the minutia of our daily lives” over the past week.

I flew on a commercial airline regulated by the feds and got courteous help resolving a boarding issue from some TSA staff. I landed at an airport governed by state and city appointees, and rode home inexpensively on a light rail train overseen by a similar entity.

I dealt with a city inspector regarding some improvements to a property we are selling and waited for the county to review the deed transfer. I attended two games at a ball park funded by a combination of public and private interests. I volunteered at a homeless shelter run by a nonprofit that works very closely with the county and from there rode with kids to visit the University of Minnesota Landscape Arboretum.

I took an old television, computer printer and used motor oil to a county-run disposal site, where I left them, free of charge.

I adopted a rescue animal from the Animal Humane Society; my new dog must by licensed by the city.

I paid taxes on beer and fuel to just about everyone.

So much for the encroachment of the federal government in the minutia of my life. Rep. Emmer must lead a much more adventurous one.

First post back in Minnesota now that I'm reading local news more closely... Let's be brief, starting with this tidbit from Doug Grow, covering filing day and the differing public personalities of the major party nominees.

"We've got four agencies that deal with water," [GOP candidate for governor Tom] Emmer said. "Health,
DNR, PCA, BOWSER [sic] … Does that make sense? So much duplication."

For the next five months, Emmer is going to drop a lot nonsense like this and pretend he's talking sense

Is there duplication among those agencies? Maybe some, but Emmer doesn't cite facts to show there's a problem. Nor does he pose a solution. He just leaves it to the listener's imagination and limited attention span to figure it out.

Consider this: The Health Department, Minnesota Department of Education's Food and Nutrition Service, Department of Agriculture and Human Services all deal with food.

The Pollution Control Agency, Health Department, Department of Public Safety and Air National Guard all deal with air. (So do welders, scuba instructors and symphony orchestras.)

The point is not how many agencies touch a broad area, but whether they overlap in expertise, mission, services, etc.

So back to Emmer's quip. Will he put the Health guys in charge of the fish or the fish guys in charge of pollution? How would it work to consolidate agencies — and how much money would it save?

We won't get that kind of thinking from Emmer on this or any subject unless he is repeatedly called on it by opponents, journalists and citizens.

I continue to believe Hennepin County Commission Jeff Johnson is a smart guy. He just plays a fool in his Hennepin County Taxpayer Watchdog blog.

Watchdogs, of course, bark at everything that moves. The mailman, the little kid across the street, an ice cream truck, another dog. Everything except their master.

If you live in a remote area beset by cross-country drug runners (or are Rep. Steve Drazcowski), you may want to have a watchdog in the yard. But in the Metro area, you're mostly going to annoy your neighbors.

Commissioner Johnson looks at a county report on federal stimulus funds and concludes the $718 million in Recovery Act dollars have so far translated "to a little over $276,000 per job created or retained."

Johnson claims the spending is a failure because the funded infrastructure projects are supposed to be judged by the number of jobs directly created.

Apparently, all the bricks and mortar and public assets being built don't count. According to watchdog math, all that money went just to create jobs.

The county budget people must love it when Johnson starts woofing at their work. But try talking sense to a watchdog.

A morning at the Day Center contains the threads of dozens of stories, ranging from poignant to hilarious.

One of our guests, if you met him on the street, would give you no indication that he was homeless — except for the backpack and rather stylish valise in which he carries his laundry. "Alex" is calm, cheerful, well-kept and college-educated veteran — just the sort of person an employer would hire if he showed up to fill a job opening.

For example, with the U.S. Census.

The Census recruited at the shelters for canvassers. The screening test had 27 questions on things like basic math and map reading; 17 right answers were required to pass, and Alex missed only one. He was the only one out of three dozen applicants who met the standard.

He became the sort of resident advisor on how to reach the homeless. Sometimes they took his advice. For example, the plan was to descend on the Day Center and the line at the soup kitchen with 35 Census takers in red Census vests, hats and badges.

Uh, no, said Alex. You only need four or five, and keep the badges under the vests. Give me a day to let people know what's going on. Otherwise, you won't get anybody to talk to you.

That's what they did, and it worked all right.

There was also an effort to actively check places like campsites to see if anyone is living there. Alex told of Census-takers riding in on snowmobiles to mountain campsites where there was still four feet of snow. (But no campers.)

Alex was assigned to another group, headed by a recently retired army officer, that was planning to do a sweep of the river, where a fair number of
homeless live. They were going to start at 5 a.m. and patrol through the woods with flashlights.

Uh, no, said Alex again. Those people have guns and dogs. How would you feel about someone coming through your bedroom with a flashlight at 5 in the morning?

The leader, who Alex said reminded him of some of the fresh second lieutenants he served with in Vietnam, thanked him for his input and said, "We're going to make the effort."

Alex said he wasn't going. So he was sent with another crew out to Rabbit Valley, an area along the river in the desert near Utah.

In the middle of nowhere, they found one camp trailer with a satellite dish set up and a few ATVs. All five Census-takers piled out of their van, with their clipboards, badges and red vests. It was 8 a.m.

Alex was given the assignment to knock on the trailer door, with the other four behind him. (If someone gets shot, why not the homeless guy?)

A woman came to the door in her bathrobe and peered out. What are you doing here? she asked in surprise.

We're from the Census. Have you been counted? asked Alex.

I'm from Palisade (the other end of the valley) and I have been counted, she said. Do you want some coffee?

Alex's crew returned without any new forms completed. The river crew also came back empty-handed.

Since Alex knew people on the river, he asked them what happened.

We heard someone coming and we hid, was the reply. We had the dogs ready to go, but they never saw us.

My home state offers a useful bellwether to Minnesotans who wonder how those "leave us alone" low tax policies will work out if the GOP actually gets a chance to fulfill its promises. Colorado Springs has gotten most of the attention lately for cutting city services and seeing its city
manager resign after only two years on the job, but the tea party mentality is strong on the western side of the state, too.

The latest is this story about Mesa County planning to cut back on services to certain communities that declined to be annexed into the city of Grand Junction. More accurately, not enough property owners representing enough acres in the communities of Clifton and Fruitvale signed a petition requesting annexation.

The details might not make sense in Minnesota, especially in the metro, where counties largely overlap with incorporated cities. Out here, there are plenty of unincorporated areas within the "metro" of the Grand Valley, along with plenty of property owners who want a rural lifestyle (heavy equipment, junked cars and horses in the yard) along with city-style law enforcement and emergency services.

When the annexation fell through, the conservative county commissioners said, you want rural, we'll give you rural! (And they showed that it's not just liberal city governments that end up threatening to cut law enforcement when their budgets shrink.)

The sheriff, who is elected but has his budget approved by the commissioners, is caught in the middle.

His department is the primary law enforcement agency for an area that's about two-thirds the size of Connecticut. They have to cover some rural, remote and rugged country, but also a patchwork of suburban and exurban communities. The area in question has about 18 percent of the county's population and accounts for roughly 40 percent of the department's calls.

The sheriff, a Republican, says he can't selectively pull back enforcement in some parts of the county and provide a different level of service in the more upscale areas.

"It’s one thing to not put a sidewalk in. But if you weren’t to
provide law-enforcement services, that criminal element or apathy gains a
foothold. And there are no guarantees that apathy or the criminal
element stays in that neighborhood.

“We have to hold the line in order to keep this entire county a good
place to live.”

Good for the sheriff.

As for the county board members making noises about reducing services, I feel their pain. But not very much, because they are among the small government conservatives who helped create the idea that government and local communities can get along just fine with lower taxes.